Regulation of waste infrastructure planning and waste to energy licensing framework, new cost recovery powers for the EPA

The new Victorian Recycling Infrastructure Plan

A central component of the Bill is the introduction of the VRIP in a new Part 2A to be inserted into the CE Act.¹  The new VRIP framework would replace the existing State-wide Victorian Waste and Resource Recovery Infrastructure Plan and the Regional Waste and resource recovery implementation plans.

The proposed objectives of the new VRIP are, among other things:

• to provide long-term strategic planning and guidance for decision-making in relation to waste, recycling and resource recovery infrastructure;
• to enable relevant planning decisions to be appropriately informed by applicable policies; and
• to support risk, consequence and contingency planning and long-term strategic planning.²

The Bill requires the Head of Recycling Victoria to prepare the draft inaugural 30 year VRIP which must include matters such as waste and recycling infrastructure requirements and future landfill needs. The Bill mandates multi-draft and consultation processes for the inaugural and subsequent VRIPs, requiring that draft copies must be provided to (among others) the Secretary of DELWP, Sustainability Victoria, EPA and the Victorian Planning Authority for comment. Importantly, at the culmination of the above processes, the Minister for Energy, Environment and Climate (the Minister) must issue an approval for a VRIP to take effect.

Under the amendments, the Head of Recycling Victoria will also have the ability to periodically review and amend VRIPs.

The New Circular Economy Risk Consequence and Contingency Plan

The Bill also proposes to establish a requirement for a new Circular Economy Risk, Consequence and Contingency Plan (CERCC Plan). Once again, the amendments require the Head of Recycling Victoria to prepare a CERCC Plan, on an annual basis. Each CERCC Plan must contain the following³ :

• identification of certain risks, including financial risks and risks of a “serious failure, disruption or hindrance to the provision of waste, recycling or resource recovery services” and their consequences;
• specification of measures that are required or proposed to be taken by “responsible entities”⁴  to address the above risks;
• identification of issues relating to performance or supply within the circular economy market or a part of the market;
• an outline of consultation carried out in preparation of the CERCC Plan and measures to address any issues identified through this consultation.

Again, for a CERCC Plan to take effect, it must be approved by the Minister pursuant to any guidelines issued under the new s 74K and following consultation with prescribed entities or entities that the Minister considers appropriate.

Importantly, the proposed amendments provide that failure by a responsible entity to comply with the CERCC Plan without reasonable excuse may result in considerable civil penalties.⁵

Further, the Bill also proposes to require entities with “significant responsibilities” in the waste and recycling sector to develop Responsible Entity Risk, Consequence and Contingency Plans (RERCC Plans), which, while functioning similarly to the CERCC Plan, would require complying entities to report annually to Recycling Victoria.⁶

The Waste to Energy Scheme

The Bill will establish a new ‘waste to energy’ (WtE) scheme (in new Part 5A of the CE Act) , enshrining into legislation the licensing and cap framework proposed in the Waste to Energy framework policy released by DELWP in November 2021 (WtE Framework).

As part of the new WtE scheme, new definitions and terms are proposed to be introduced, however several key concepts and parameters such as “advanced recycling processes”, “cap limits” and “exempt waste” will be subject to future regulations.⁷

Central to the new WtE scheme is that a WtE licence would be required for the operation of thermal waste facilities. Operating a thermal WtE facility without a WtE licence, failing to comply with conditions of a WtE licence or operating thermal WtE facility using banned waste would attract significant civil penalties.

Importantly, the amendments also provide for the introduction of a “cap” on waste to energy capacity through the requirement to apply for, and the issuing of, “cap licences”.⁸  Under the new WtE scheme, the cap licences are licences issued by the Head of Recycling Victoria that permit the operation of thermal WtE facilities, while also specifying:

• the maximum amount of permitted waste to be processed;
• the period during which the facility may operate; and
• any prescribed matter.

Only “approved applicants” may apply for cap licences, with proposed section 74T governing Recycling Victoria’s cap licence approval process. “Approved applicants” are persons who are invited by Recycling Victoria to submit an expression of interest and satisfy the Regulator of certain eligibility criteria outlined within the Bill and to be prescribed by regulations.⁹   Importantly, the amendments provide that approvals of cap licences (as well as their suspensions and revocations), are subject to fit and proper person tests applying to the relevant applicant (or licence holder in each instance). The fit and proper person test is provided for under proposed section 74ZJ and captures, among others, individuals or entities that have committed serious breaches of the CE Act, an offence under the Corporations Act, or other specified legislation.

It is important to note that once a “cap limit” is prescribed by regulation, any cap licence issued by Recycling Victoria cannot exceed the defined limit.¹⁰  The “cap limit” will be the maximum aggregate amount of permitted waste that is able to be processed in thermal waste to energy facilities. Interestingly, Recycling Victoria will also have the power to decrease the allocated cap amount in a cap licence if the Head of Recycling Victoria considers that the licence holder has demonstrated a pattern of processing an amount of permitted waste which is significantly less than the allocated amount specified in the licence.¹¹

Finally, another key feature of the new licence regime is that operators that are already licenced to operate energy from waste facilities are not required to apply for cap licences, but instead are entitled to apply for what would be known as “existing operator licences”.¹²

Under the new provisions, existing operators are proposed to be defined as operators who hold each of the required permissions under the Environment Protection Act 2017 (EP Act) or the Planning and Environment Act 1987 to undertake thermal WtE processing if:

• the permissions were in force before 1 November 2021; and
• the permissions currently remain in force.¹³

Persons who fall within the meaning of “existing operators” may apply for an existing operator licence within six months after the commencement date of the provisions of the Bill. There will be a six month “grace period” for an existing operator to apply for an existing operator licence. Once again, the Head of Recycling Victoria will be responsible for determining applications for existing operator licences.

Other important changes introduced

The Bill makes other noteworthy changes to the CE Act and the EP Act including:

• clarification on depositing industrial waste on land – the definition of “depositing” in the EP Act will include burial or burning, including burial or burning of litter or waste on land owned by or in the control or possession of the person responsible for burying or burning the litter or waste;
• introduces monetary benefits orders as an additional compliance tool under the CE Act, enabling courts to order that a person pay an amount equivalent to the monetary benefit gained by an environmental offence;
• annual market reports – will be required to be produced by Recycling Victoria on waste, recycling, and resource recovery in the state, and it will be empowered to prepare market strategies to foster markets for recycled materials;
• additional civil penalty offences are to be introduced to ensure compliance with CERCC and RERCC plans, and with waste-to-energy licence conditions;
• external review rights will be introduced to enable applicants for cap licences, existing operator licences and applicants seeking to amend licences to seek review of decisions at the Victorian Civil and Administrative Tribunal;
• information sharing arrangements between Recycling Victoria, Sustainability Victoria, and the EPA will be permitted;
• ability of EPA to refuse certain permission applications for waste management facilities made under the EP Act where they are inconsistent with the VRIP; and
• disclaiming of land and liabilities associated with it under the EP Act - specific provisions will be introduced with the intent of displacing (ie “trump”) parts of the operation of the Corporations Act 2001 (Cth) that otherwise allow a company to disclaim property and liabilities associated with property such as clean up of waste or contamination.¹⁷  The intended effect of the proposed sections 297(5) and 297A of the EP Act appears to be that the EPA could be permitted to recover costs incurred where it has stepped in to take action, such as cleaning up a contaminated or polluted site, issuing certain remedial notices, or monitoring or enforcing compliance with such notices where a liquidator otherwise seeks to disclaim the property or liability. The interaction between the insolvency provisions and powers of liquidators to disclaim property and liabilities under Victorian environmental legislation has been the subject of consideration by the courts in recent times, for example, where a dispute arose over liability for stockpiled waste on a site owned by a company which had been placed in external administration and was in the control of liquidators.¹⁸

What happens next?

While the amendments to the CE Act proposed by the Bill will provide the framework for the energy from waste licensing regime, much of the detail regarding the administration of the regime, including the amount of the overall “cap limit” and numerous defined terms will be set out in regulations which will follow if the Bill is passed. In the meantime, the new Regulator, Recycling Victoria, is set to commence operating on 1 July 2022 administering its functions under the CE Act.

The authors acknowledge the contribution of Edward McCombe, Lawyer in preparing this update.